A trading journal is a record of every trade you make and why you made it. It sounds boring, but it is the fastest way to find out what is working, what is not, and which mistakes you keep repeating. Most traders who improve keep one.
What to record
| Field | Why it matters |
|---|---|
| Date, ticker, long or short | Basic record |
| Entry, stop loss, target | Shows whether you planned the trade |
| Position size and risk in $ | Checks your risk rules |
| Reason for the trade | Shows which setups work |
| Exit price and result | Measures performance |
| Did you follow your rules? | Separates bad luck from bad decisions |
| How you felt | Reveals emotional patterns |
Two numbers to track
Win rate is the percentage of trades that make money. On its own it can mislead you: a 70% win rate loses money if the losses are much bigger than the wins.
Expectancy combines both: (win rate × average win) − (loss rate × average loss).
Example Expectancy
Over 50 trades you win 40% of the time, with an average win of $150 and an average loss of $60. Expectancy = (0.40 × $150) − (0.60 × $60) = $60 − $36 = $24 per trade. A positive number means the strategy has an edge, as long as costs are included.
How to review
- Weekly: read every trade. Count how many broke your rules.
- Monthly: group trades by setup and see which ones make money.
- Pick one fix at a time, such as “no trades in the first 15 minutes”, and check if it helps.
Tools
A simple spreadsheet is enough. Some traders add a screenshot of the chart at entry and exit. Dedicated journal apps can import trades from your broker, but the important part, the reason and the emotion, still has to be written by you.
Conclusion
Markets do not tell you why you lost. Your journal does. Write it every day, review it every week, and let the numbers, not your feelings, decide what to change.
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